PENSION HEALTH CHECK
May 10th, 2019.


Now is a good time to plan whether you will make sufficient pension contributions in the tax year and to check whether you will be in danger of exceeding your annual pension contributions allowance, which would lead to a tax charge.


Your annual allowance is normally set at £40,000, expanded by any unused annual allowance from the previous three tax years.

However, a lower Money Purchase Annual Allowance (MPAA) of £4,000 may apply if you have accessed your pension savings from a defined contribution (money purchase) pension scheme.

The MPAA does not apply if you took your benefits as:
• a small pot lump sum
• a pension commencement lump sum where no pension income was taken; or
• income from a capped drawdown arrangement

The MPAA is not expanded by unused annual allowance from earlier years and, once the lower level of allowance is in place, it cannot be removed. The MPAA was reduced from £10,000 to £4,000 on 6th April 2017, increasing the risk of exceeding the allowance in 2017-2018 and later years.